$$\begin{array} { | l | r | r | r | }
\hline & & \text { Assets } & \text { Liabilities and Net Worth } \
\hline \text { Stock Shares } & \$ 400 & & \
\hline \text { Reserves } & 40 & & \
\hline \text { Property } & 300 & & \
\hline \text { Securities } & 160 & & \
\hline \text { Loans } & 80 & & \
\hline \text { Demand Deposits } & 180 & & \
\hline
\end{array}$$ The ?gures in the table are for a single commercial bank, Bank A. All ?gures are in thousands of dollars. If the reserve ratio is 10 percent and a check for $10,000 is drawn and cleared in favor of Bank B, then the actual
Reserves of Bank A will
A) still be $40,000.
B) decrease $10,000.
C) decrease $11,000.
D) decrease $9,000.

Question

$$\begin{array} { | l | r | r | r | } 
\hline & & \text { Assets } & \text { Liabilities and Net Worth } \
\hline \text { Stock Shares } & \$ 400 & & \
\hline \text { Reserves } & 40 & & \
\hline \text { Property } & 300 & & \
\hline \text { Securities } & 160 & & \
\hline \text { Loans } & 80 & & \
\hline \text { Demand Deposits } & 180 & & \
\hline
\end{array}$$ The ?gures in the table are for a single commercial bank, Bank A. All ?gures are in thousands of dollars. If the reserve ratio is 10 percent and a check for $10,000 is drawn and cleared in favor of Bank B, then the actual
Reserves of Bank A will
A) still be $40,000.
B) decrease $10,000.
C) decrease $11,000.
D) decrease $9,000.

Quizplus · Accepted Answer

When a check for $10,000 is drawn and cleared in favor of another bank, Bank A's reserves decrease by the amount of the check, which is $10,000, because the reserves are used to settle the transaction.

The ?Gures in the Table Are for a Single Commercial